Elaborated mostly after the OECD model, the double tax treaties signed all over the years by Spain grant the signatory states the confirmation that the profits will not be double taxed (in the country of residence of the company’s members and in Spain). This is possible through exemption (when the income is not taxed at all in Spain, only in the country of residence) or by credit (when the income is taxed, but the rate is recovered after depositing a request at the appropriate Spanish tax authority).
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The main provisions of the double tax treaties
The double tax treaties of Spain also provide smaller or non existing withholding taxes on dividends, interests and royalties. These withholding taxes are depending on the level of participation at the company’s capital by the foreign citizens. In some cases, if the non resident owns more than 25% of the company’s capital, there is no withholding tax on dividends. In some cases, only 10% participation is required. Our specialists can offer more information on the tax system available here, including on the procedures applicable when a company needs to obtain a Spanish VAT number.
More details on the double taxation treaties in Spain are available in the video below:
Besides the double tax treaties, Spain has also signed numerous protocols of exchange of information with offshore jurisdictions, in order to avoid the tax fraud. Every year, Spain is exchanging lists with taxpayers with the treaty countries.
If the requester wants to take advantage of the treaty’s regulation, it must provide that he is already paying taxes in the residence country. For this, the authorized foreign tax authority must provide a tax residence certificate.
Along with the certificate, the requester must also provide the completed standard application for beneficiate from the treaty’s regulation.
Spain has signed numerous double tax treaties all over the years. Here is a list with the Spain’s partners: Algeria, Albania, Argentina, Australia, Austria, Belgium, Bolivia, Bosnia, Brazil, Bulgaria, Canada, Czech Republic, Chile, China, Colombia, Costa Rica, Croatia, Cuba, Ecuador, Egypt, El Salvador, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea, Latvia, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mexico, Moldova, Morocco, Netherlands, New Zealand, Norway, Pakistan, Panama, Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Singapore, Serbia, Slovakia, Slovenia, South Africa, Sweden, Switzerland, Thailand, Trinidad and Tobago, Tunisia, Turkey, United Arab Emirates, united Kingdom, Uruguay, united States of America, Venezuela, Vietnam.
For details, you may contact our company formation agents who may help you incorporate a company in Spain.